Construction cost estimating concepts and their application

Vita.Business failures among construction contracting firms occur at a rate which place contractors among the highest risk customers to banks. Many, if not most, contractor failures can be traced to the inability of contractors to properly evaluate the cost of a project for purposes of submitting a bid in a competitive market. Improper evaluation of project costs results from poor organization of the estimating function overuse of shortcut procedures, and failure to consider all elements which contribute to cost. This dissertation examines the reasons for poor estimates, reviews methods in use to minimize estimating error, and develops an overall system for production of an estimate which fully considers all features of the project which contribute to its cost. The study concludes: 1. Current methods of cost estimating employed by construction contractors are haphazard and often grossly in error, especially on large, complex construction jobs. 2. Commercially available textbooks on construction cost estimating do not provide adequate background for an estimator entering the construction field in areas other than small building construction. 3. Cost estimating is not adequately integrated with other cost engineering functions within construction firms. 4. Inadequate attention is given by estimators to cost items other than those directly related to permanent material quantities. 5. The effects of times on coast are given minimal attention in estimating. 6. Systems in use for estimating do not facilitate follow-up study of estimated costs versus actual performance as a means to attribute overrun/underrun cost problems to poor estimating, poor construction management, or other problems